Question

Edgewater Enterprises manufactures two products. Information follows:     

	Product A			Product B
Sales price	$	13.60		$	17.25
Variable cost per unit	$	6.70		$	7.40
Product mix		60%			40%

Calculate the break-even point if Edgewater’s total fixed costs are $244,000. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.)

Answer 1

Solution:

	Product A	Product B
Unit Selling Price	$13.60	$17.25
Less: Variable Costs	$6.70	$7.40
Contribution Margin per unit	$6.90	$9.85
x Product/Sales Mix Ratio	60%	40%
	$4.14	$3.94
Weighted Avg Contribution Margin per unit (4.14 + 3.94)	$8.08
Total Fixed Costs	$244,000
Break Even Point in Units for the company (Total Fixed Cost / Weighted Avf CM per unit)	30,198 (244,000 / 8.08)
Break Even Point in Units for company	30198	30198
x Sales Mix	60%	40%
Break Even Point for each product	18119 (30198*60%)	12079 (30198*40%)
Break Even Point in dollar sales (BEP in Units x Unit Sellling Price)	$246,416 (18,119*$13.60)	$208,366 (12,079*$17.25)

Note - Break Even Point in Units for the company is rounded off to 0 decimal places

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